Employer cites 'damage' to business, goodwill in unfair dismissal claim
The Fair Work Commission (FWC) recently dealt with a case involving a small business employer and a worker's claim of unfair dismissal. The dispute centred around the sale of a personal vehicle and its aftermath, which led to the termination of the worker's employment.
In this case, the FWC had to determine whether the employer had complied with the Small Business Fair Dismissal Code when dismissing the worker.
The decision hinged on whether the worker's actions constituted serious misconduct, and if the employer had reasonable grounds for their belief.
Background of the case
The case arose from an incident where a customer visited the employer's car dealership between 26 and 29 February 2024. This customer caused a disturbance, diverting other customers away and making threats against the dealership. The police were called to remove the customer from the premises.
It was discovered that the customer had purchased a car from the worker, which was actually owned by the worker's mother. The vehicle was subject to an 'encumbrance', preventing the customer from claiming insurance on it. This led to the customer posting a negative review of the dealership online.
The employer alleged that they had arranged a meeting with the worker on 5 March 2024 to discuss these issues. However, the worker reportedly packed up their belongings and left the car yard without attending the meeting. The employment relationship ended on that day, though there was some dispute about whether the worker was dismissed or had resigned.
The employer's arguments
The employer contended that the worker's dismissal was consistent with the Small Business Fair Dismissal Code. They argued that at the time of dismissal, they employed nine permanent staff, including the worker, qualifying them as a small business under the Code.
"It is fair for an employer to dismiss an employee without notice or warning when the employer believes on reasonable grounds that the employee's conduct is sufficiently serious to justify immediate dismissal," the employer said, citing the Code.
They argued that the worker's conduct met this threshold. The employer claimed they had previously instructed the worker not to sell personal vehicles during work hours and had warned them about "operating a conflicting business".
Furthermore, the employer submitted that the worker had breached their duty to act in good faith and loyalty towards their employer by using their position to access the employer's customers. They also argued that the worker had damaged the reputation and goodwill of the business through this incident.
The worker's defence
The worker denied engaging in the alleged conduct and claimed he wasn’t given any warnings by the employer. He argued that even if the alleged conduct had occurred, it would not amount to serious misconduct justifying summary dismissal under the Code.
The worker's representative stated:
"[The worker] maintained that he did not engage in any conduct that would have caused any serious harm or imminent risk to the health and safety of a person, nor the reputation, viability, or profitability of [the employer's] business."
The worker also questioned the employer's process, noting that the termination letter had been prepared before the scheduled meeting on 5 March 2024. They argued that this showed a lack of genuine consideration of the employer's consultation obligations.
Additionally, the worker pointed out that the Code checklist had been completed by the employer one month after the termination, raising questions about the timing and authenticity of the process.
The Commission's decision
After considering the evidence and arguments from both parties, the Commission upheld the employer's jurisdictional objection and dismissed the worker's application.
The Commission found that the worker had indeed sold their mother's car to the customer, which led to the subsequent issues. The FWC explained:
"I am satisfied that [the worker] sold his mother's car to the customer. Whilst [the worker] may not have initiated the original approach or viewing of the car, I am satisfied that he concluded the sale."
The Commission acknowledged the potential damage to the employer's reputation caused by the negative reviews and customer interactions resulting from this sale.
The decision noted that the disgruntled customer had returned to the employer's caryard, threatening to smash car windows and warning other customers not to buy from the dealership.
The FWC said: "I am satisfied and find that [the employer] believed that the result of [the worker's] action in selling his mother's car to the customer created a serious and imminent risk to the reputation of [the employer]."
This belief was deemed reasonable given the circumstances, and the worker's conduct was found to meet the definition of 'serious misconduct' under the Code.
"As a result, I am satisfied and find that [the worker] has acted in a manner which satisfies the definition of 'serious misconduct’,” the FWC said.
This case highlights the potential consequences of employees engaging in personal business activities during work hours, especially when they may impact the employer's reputation. It also underscores the significance of proper documentation and timing in employment termination processes.
